City Council - workshop

August 31st to order. Looks like we got a full dais. Everybody is here. Staff is here. Everybody's chowing down. We're ready to get going. So we do have a switch up in the schedule today. We're just going to flip items. We're going to start out with level of service backslash budget. We're just switching the order because it feels like it'd flow a little bit better that way. Yep, and that was my decision last minute. Looks like Aaron will be ready to go in a second. This is the order you wanted, right?

Yes, this is great. This works out perfect.

Because you were scrambling there for a second.

Yeah, no, no.

Okay, go ahead.

Good morning, Mayor, Council. Myself and JC are here to introduce the topic of level of service plus general fund balance and stabilization. So this supports your goals of multiple goals, really all of them, because we're talking about level of service, which impacts everything, whether it be a general fund item or an enterprise fund item. Today we really want to just take a look at what level of service is and what does it mean when we're talking about it from a council policy perspective. It's not about FTE vacancies, contracts, whether they're in-house or internal or what tools or equipment are needed to do the job. It's really about defining what job is to be done. Council defines the what, which is the service outcomes that residents should receive, and then staff comes in and tries to help define the how. What methods are we gonna use? Do we use in-house tools? Do we use contractual service tools? Do we do some kind of hybrid approach to meet those council outcomes? Sort of like the strategic plan, which is the what, and then the work plan, which we report on on a quarterly basis also, is the how. So really level of service, just as a breakdown in one minute, level of service, and you'll see LOS throughout the presentation, sorry I didn't have to type out level of service, it takes up a lot of space, is the promise results to residents with regards to four main items. Frequency, response, quality standards, and coverage. At the same level of service, if we keep the same level of service constant, Costs exist regardless of the delivery method, and I've got some examples we'll talk about. Changing level of service dials, and there's those four dials which we show here, changes the workload. It may increase the workload, it may decrease the workload. And as such, it may do the same thing with costs and residents' experiences. So level of service is not who does it, in-house versus contract, it is the results we commit to. So just to paint a picture of level of service and to put it in perspective for those that are listening to the workshop and for everyone here. We have some just general examples. Say your family wanted to go on a vacation and you don't want to go to the beach. You want to do something historical. You want to look at some historic sites. You're like, hey, you know what? Let's go to Europe. So this would be Council's what as a family? We wanna go to Europe, we wanna see some historical sites, maybe enjoy some museums, experience some local food, And you have the what. So we're going to go to Europe. We're not going to Florida. We're not going to hang out at the beach. We're going to see historic sites. We're going to do it for 10 days. And here's our budget. That's the what. So then you have someone like a travel agent help you define the how. That's how you're going to get those things done. So the travel agent would look at which flights are cheapest, whether you take a train, a rental car. Maybe you take a boat and you do the Mediterranean for a part of that. what hotels fit in your budget, and how to schedule the trip so you can see everything that you want to see. That's the how. Another example is a home, for some of you that are familiar with home building. A homeowner might say, and I know at one time I did build a house, and so this is how it sort of worked for me. We told our architect, we would need a house that fits on this property, and it was a unique piece of property, and we want a three-bedroom, two-bath, I want a walk-in shower, need this, that, that. And so you define the what. This is what I want. And so then the architect came back and said, OK, based on property, cost, those kind of things, this is what I've designed for you. So the how, which is that so the council is the what. We want a house, three bedroom, two bath, that kind of thing. Then the architect slash staff would come in and say, OK, here's the materials you need to use to be energy efficient. Here's the floor plan we're recommending. Do you do slab or crawl space? Those are things that are figured out, that what, to make happen for you what you would like. Again, at dinner, you come in, and you've got a movie at 7.30, and you show up at 6.15. You're like, hey, I really want a steak. I want a good, great steak cooked medium. I don't know if that's even true, if you can have a great steak cooked at medium. Maybe I should have said medium rare. That's maybe more of a great steak. Side note, I'll move on. I want it quick enough so I can make my movie, and I want high quality meal. So based on those parameters, the chef would say, OK, what kind of steak can I use that I can meet that time frame? Do I pan sear it? Do I grill it? How do I coordinate the kitchen timing on it? And to deliver that plate effectively so you can get to your movie on time. Now, an example that is something that we deal with every day on the what and the how, the what is council. Council, when it comes to say, for instance, a city park shelter. Council says, we want our shelters cleaned daily. We want trash emptied every morning and restrooms maintained at a high quality standard. If you gave us that direction, the what, we know what the what is. So then staff comes in with the how and tries to figure out, okay, those are council's three items. for park shelters. We need to take a look at how many people it's going to take to make that happen. Do we do it at 5 in the morning or 9 in the morning? What cleaning products and equipment are needed that we procure appropriately? Do we contract or do we do it in-house? Going back to the very beginning, when you look and we talk about level of service, so we're trying to frame this so we'll ultimately get direction from council when we're talking about level of service, where you'd like to go, and we'll be able to provide that to you from a future discussion. Level of service, to change the dial, either increase or decrease, either increase and decrease services, or maybe increase or decrease costs, there's these four dials. Frequency, how often are we doing the service? Are we doing street sweeping once a week, once a month, once a year? Quality standards, to what specifications? The coverage, are we doing the whole city, are we specific on a certain season, or certain hours, or certain area? And then how fast are we responsive to that service level? Those are the big level of service components and questions. So, level of service, workload, cost, reserves, they're all related. A chosen level of service sets the work volume, staffing, and contract scope. If we have a constant level of service, Cost grows with that level of service. Revenues must match or reserves get used. We're at a point where JC's gonna come in and we're gonna talk briefly about that. How do we stabilize the general fund with the current level of service? We have a constant level of service that you have defined for the community, that the community has talked to you about, about desiring. But if we don't have revenues that keep up with the increased cost of that level of service, we start to eat into the reserves. So we need to try to align level of service with multi-year revenues and also maintain our reserve targets. So when we're talking level of service, and if council's like, yep, I want more detail on level of service, I want to talk general fund level of service, or maybe it's I want to talk Community development, general fund, level of service. Then we start asking ourselves some questions so council starts asking these type of questions so then they can provide direction to staff to get you information so you can make an informed decision. Level of service, what outcome do residents need most? How often and how fast should we provide it? To what standard? Where and when is coverage required? What risk is acceptable? And what should we measure and report out? Again, going back to the four dials. To give you some specifics on the questions asked, let's just take police for example. If council wants to have a discussion about level of service with police, let's do it. Here are some ideas and some type of questions and things that we'd be looking at. Frequency, as the first dial. Do you want proactive patrol or do you not want to have proactive patrol? Do you want to actively enforce the code, any kind of code violations, or do you want to be complaint driven? Do we want traffic patrol or do we not want traffic patrol? Quality standards. Case clearance benchmarks. Compliant resolution timeliness. Coverage. Do you still want to maintain 24-7 coverage? Do you want to increase coverage in the downtown or say increase coverage during special events? And then your response times. How responsive are you to community needs? Those are those dials and policy discussions which defines the what. Once we've defined the what, then staff can help council determine the best cost and associated with the how. Planning is another example. Again, frequency. Weekly intakes would be discussed. Pre-application meetings per month. Quality standards. How complete are we? How error-free are we? Are we consistent with the comp plan and the code? Coverage. Counter hours. Do we reduce the counter hours if you, say, wanted to reduce costs? Or do you want to increase service? If you want to increase that dial on response, then maybe we need to look at increasing the coverage dial and say, you know what? We need to have two people at the counter. eight to five. And then our response time, days for first review, days decisions by applications. If we were hearing from the community and the building community that hey, we need better response from planning. We would like to have turnaround on all planning applications within five days instead of 10. And we need this, then we would need to come back to you on how we would make that happen. Again, council would define the what and we'll help you define the how. And then the final just example here is, say for instance, parks. Frequency, mowing, how often do we wanna mow? Clean the restrooms and et cetera, our cleaning cycles. Quality standards. Right now I'd say we have really pristine to good parks. That's one of our prides that we have in this community. If you wanted to change that dial, do you wanna go from good to pristine? Or do you wanna go from good to fair? That all is a what? and then staff will help determine the how. When it comes to the how, how will staff respond? We will translate council's outcomes into costed options. We'll look at in-house, contract, hybrid. When you define the what, we'll help determine, we'll provide you recommendations on the how. We'll present best value options, balancing costs, quality, timeliness, and risk. And then, we are already doing this summary, we'll commit to quarterly dashboard reporting through our quarterly strategic plan updates. Couple of extras, just so we have a general idea of the what and the how when it comes to some items. And some of these might look familiar to you. I think I've got three of them. So the how, from a council perspective and staff perspective, how? Case study one, city engineer. What is we need a city engineer? to serve the community and to serve our commerce out there. The how was, it's a highly specialized field. Workloads vary depending on what's coming through each time of year. The how for the way we're doing it right now is we have a firm provide it. We used to have an in-house city engineer and we found that contracting out provided better services to not only the community but the public. It also provided a bench depth because it was an engineering firm, it was not just one person. Outsourcing ensured expert capacity on demand and the bottom line was we got the best value given specialization risk. Another how is the water meter reading. Now this is one that you're probably very familiar with. The city engineer was done probably about almost 14 years ago. But this one is relatively fresh from a council perspective. You may recall we used to have a contract for meter reading. The problem with that was the vendor rates continued to escalate and we started to observe service issues. So the how, staff made a recommendation for the how to change that. Level of service stayed the same. Level of service is the same. We went from contract to in-house. And by insourcing, it required two FTE, better produce, better services, and better cost control. So the bottom line, in-house was better value for the what, which was contrary to the engineer. So it's different ways of the how, and we assess those. Is it good to contract out? Is it good to bring it internal or some kind of hybrid? And then case study number three when it comes to investment advisors. Staff takes a look at the how. Finance engages professionals to monitor markets and advise policy, which includes it in the contract. It provides an expertise at a lower opportunity cost than staffing. We don't have a dedicated person always having to do that. We have an expert that's in the field looking at it on a regular basis. Bottom line, we get the best value for our risk adjustment returns and compliance by contracting this service. So council adjusting the what for cost reduction. Through our general discussions that we've had on the dais with council, council seems to want to look at maybe level of service and how we might be able to adjust costs and more so reduce costs. So what can we do from a level of service perspective? We would need to focus on a discussion in the future on maybe looking at lower frequency on some of the levels of service, or allow longer response times, or set good, set go from good, go to good, instead of pristine standards. Or make it look at seasonal or limited coverages in off-peak periods. So there's other things that we can do to reduce the cost of the what. The how, and one of the things that staff does on a regular basis, and how we respond to any of the what's that you would provide, is we would try to optimize workflow and scheduling, whatever that level of service is. We'd look at shift delivery methods. We'd improve technology and tools. We'd look at procurement and materials. Deploy staff differently, like in the examples that I just mentioned before. Consolidate and coordinate work where possible. Reduce failure demand and manage contracts as precisely as possible. So before I turn it over to JC, I wanna just sort of highlight the spirit of my part of the presentation was what is level of service? And how do we get there to make a change? There's those four dials I talked about. That is the what, that's the council focus is on those four dials and the what, staff does the how and provides an opportunity for council review to make good informed policy decisions. So, if we want to continue to have level of service discussions, staff is more than willing and happy to move forward with any type of level of service discussion Council desires, whether it be the full budget, or a specific specialized, maybe general fund discussion, and on what you'd like to see. Whether it's a focus on increasing service levels, or decreasing service levels, or looking at budget stabilization. And with that, I'm gonna pause and turn it over to JC to talk a little bit about numbers.

I was gonna say good morning, but good afternoon. So I'm gonna walk through some of the numbers. You do have some handouts in front of you. And I'm gonna, hopefully they were attached with this presentation. The first is going to be our budget to actuals for fiscal year 26. And I'm gonna focus on the general fund because I feel like that seems to be where most of our efforts are talking about level of service. And the things I wanna point out, and let me get my pointer out here so we can follow along. Things I wanna point out, this year is, or this data is, unaudited and incomplete data. So this is as of August 24th, 2026. We still have our 60-day accrual period, which actually goes through today. So there are some revenues that are not being recognized yet because we haven't done those transactions. And that could be in the upwards of about a million dollars, depending on when we receive those. As of right now, you can see that most of these revenues are pretty on target. The next thing I want to point out are the expenditures down below and I want to make very obvious that we are saving in areas I think there's a misconception that since government has the ability to spend we just spend and that's really not the case We do a really good job here of managing what we provide as far as the quality and level of service with the dollars that we do have and then at the Baseline here. I just want to point out that we're look to be currently about thirteen point seven million dollars as our ending balance But again, I want to reiterate it's not complete yet as this will be subject to change and that it leaves us currently at about 31% The next thing I want to point out is I have two kind of giant handouts on the dais today and There is one with a blue highlighted as of date. And so this is almost the exact same data as of last year on September 1st, 2025. And you can see the revenues up top and then the expenditures down below. And you could see that we were about a $925,000 in the red last year at this point in time. But then if you flip to the one with the green highlighted, YOU CAN SEE CURRENTLY, SAME POINT IN TIME ALMOST, BEFORE THIS DATA WAS CONSOLIDATED, WE ARE ABOUT $2 MILLION IN THE RED. I DO WANT TO POINT OUT THAT 2025 CLOSED OUT ABOUT HALF A MILLION IN THE BLACK. so again there's going to be some movements that we are still going to have financially moved because of our policies but i don't think it's going to be the full two million dollars and we're going to end up with a two and a half million dollar swing here so i do think that we are going to end in the red still So when we're looking up the general fund, and we're talking level of service, we have an imbalance as of right now. And we've had this imbalance for as long as I've been here in previous. So what we're looking at is to provide our current level of service, we budget about $46 million. and we are bringing in about $39 million. So we're potentially utilizing 6.2 of that beginning balance, which is okay. Council gave the authority to go below, as a budgetary basis, that 25% of policy to that 19.2% that we've budgeted, but also realizing that we're gonna keep the actuals above that 25% line. And why is this important? So of that $46 million, when we set what is the priority as far as council on the level of service, council has given 83% of the expenditure budget to public safety. So a large portion of the services that we're providing in the general fund are public safety geared. And so that is where we are spending our money and that has been the priority given by council. And just as a trend financially where we're going, you can kinda see back in 2016, we had a pretty high fund balance with $13.4 million because our expenditure budget was 24. As of 27, we're up to that $46 million amount. I'm estimating we're gonna come in a little bit below $15 million, which is about 32.29% as far as a beginning fund balance. What is really significant about that is if you take a look at 2023, The beginning balance is almost the exact same, but it's 11% less. So as costs go up, that reserve balance needs to go up as well. As the reserve has somewhat stayed the same over the last five years, you can see that that percentage keeps going down. And as we increase services, like we add 12 public safety FTE, we're gonna potentially draw those down a lot faster. And that is kind of all I have as a generic level of service discussion as far as the numbers are presented. Erin and I would be more than happy to answer any questions and or take any direction that you guys may have as far as level of service.

Thank you. All right, bring it back to council to see if they have any questions. Seth, you got any questions?

Not right off the top of my head, maybe done a little bit.

Kathleen, you got any questions?

Yeah, it feels like this all started off with getting a list of vacant positions and then determining whether those positions were still needed to be filled. And so I was I guess it's screen 15 or page eight. I don't know which one you follow. how staff will respond. Yeah, that one. So it seems like we could just, or in my thinking, it's like why don't we just take these values and put them on some of these positions that are on this list of vacancies, like human resources, like GIS supervisor, like lead engineering tech, like urban forester trail and coordination. I feel like the rest of what's on this list are needed, so in my thinking we should hire them, but maybe some of the others we need to look at and maybe do this list and evaluate, give us some estimation of what would be better, in-house vendor or, you know, accordingly from this values list.

Yeah, we assess that on a regular basis, and even if you take the trail coordinator position that's been created, we had that discussion even with Public Works and Jason and stuff, because we had an urban tree, urban forester, and we changed that position a little bit, but we were trying to figure out what's the best way to provide the services that we need internally, plus the services that we need from an external perspective. And through those discussions, we recognized that with Dollar Mountain, the trails that we have, other things, we needed to modify that position, and we also recognized that the portion of the urban forester aspect that we were utilizing them for all the contracts in Public Works could be better utilized as an outsourcing through the contracts that we have. So that's a great example of how we were able to take and prioritize the needs of the organization, the needs of the services provided, and change the way we were providing that level of service in terms of the how. We didn't change the level of service. So the positions that we're talking about, if you're talking about positions, the positions aren't, we need to talk level of service because you can't just eliminate a position without changing the level of service. So if we want to make a difference in, say you want to save, we want to spend less money in general fund. Okay, so let's talk about the level of service that General Fund provides, and let's look at those levels of services and determine what areas that you may want to change associated with the risk and the value within the community, and then those levels of service would change. It could potentially change in FTE or a contract, because you've gotta think, you've gotta do level of service, the what and the how, and they've gotta be together. It's not about an FTE if you want to save money, it's about level of service.

Well, you were just talking in this presentation that sometimes we hire in and sometimes we use a vendor. So that's what I'm wondering if some of these positions could be outsourced, if some of these positions aren't necessarily in-house yeah like the like the lead engineer you said it was better to have them outsourced so i don't really understand why they're on the list as a hiring position so we need engineer tech it's different than the engineers

Could I answer that one, please? Yeah, sure. Yeah, the engineering techs are very, very different than the city engineer. The city engineer is actually a licensed professional engineer. The engineering techs are the positions that are responsible for being out in the field every day, rain or shine, watching all of the capital projects get built both by the developers and by ourselves. So it's a very different position, one that we need to have in-house so that they're out there monitoring the installation of all the infrastructure to make sure that everything is being installed to spec.

Well, it just sounded like the company that we have currently is a full engineer, full company that could maybe accommodate that.

They could, but as an example, we pay the city engineer probably $150 an hour for billable time. We pay an engineering tech probably in the fully loaded, I'm looking at JC, maybe 30, maybe a little bit higher, 30 some, $40 an hour. So there's a great value to having that person on staff versus using the firm and licensed engineers for that type of work. So we've definitely balanced that very much. And the amount of time, they have to be out in the field full time. So if we were gonna pay the city engineers for that, our engineering costs would go up quite a bit.

Rick, do you have any questions?

Yes, thank you. JC, can you go back to slide 26? okay so you're forecasting at the end of this year 2026 or the fiscal year has already ended with the 36 so that's where we started the year so 2026 we started with 15.8 and so we're going to end 2026 with 14.8 million or start off 27 with 14.8 million which is already we'll start as of tomorrow

It's already there inherently.

Okay. So on the green sheet you indicated we are a $2 million deficit? Yep. So when we look at that, how can you relate that chart to the $2 million?

Excellent question. So I did say that this is the data as of August 24th. And so I do know that there's outstanding journals that need to be accrued back. So when we receive certain revenues between July 1st and August 31st, uh they are eligible to be pushed back into the previous fiscal year we haven't done all of those movements yet financially because today is the last day and so we will add some more revenues we look at other things as far as internal service credits back to departments which will change that balance as well and so when i kind of massage all this and estimate it back together i think we're going to be closer to a million dollars in the hole okay so when i'm looking at the chart that's behind you

It indicates $14 million and 32%. Why doesn't that show $1 or $2 million in the red?

Because I'm adding in the estimated amounts that I believe will be there by the end of the actual financial period. Does that make sense? So I could show 13.7 here on the bottom, but I don't think it's going to be where we end. based on financial trends the last few years of when we receive revenues.

Okay, so we're still able to state we have a reserve?

We have a reserve, and again, I think it's going to be closer to that $15 million amount than the 13.7 that you saw on this handout. Again, it's just an estimate, just to kind of hopefully be clear that I'm not undershooting where we're going to end the year.

Okay, thank you.

One of the key pieces of this, a takeaway that we talked about for this slide in particular, is the key point that our unrestricted beginning fund balance has stayed pretty static over those years. There's a decade there where if you look at the budget expenditures, they've almost doubled. which is creating the problem of the percentage of fund balance. This, without stabilizing this, it will get to a point where it's gonna be operational issues. Now, the one thing that I think is interesting is we started at 55 in 2016, we got down to 39.38 in 2022, and then all of a sudden there's a little bit at 43, 41, 40, and I believe that blip, if you think about it, there's one thing that we did make a difference in, because we knew we needed to help stabilize the fund, that was the implementation of our utility, public safety utility fee at about that time.

It's more of the budget cut.

And budget cut. Okay, more budget cut. So we cut $2 million basically out of the budget, which helped with that. So this is not something that is new. We've been addressing this for a long time, but again, it continues to pop up. We, our reserves, are not keeping up. We're eating in the reserves. Our level of service has stayed the same, if not increased, but we're not increasing revenues at the same pace.

Thank you. Victoria, got any questions?

Yes, thank you. The first question I think would be back on slide 19 again, but it's all right if you don't go back there, but maybe it might help. So when you talk about level of service, And you talk about the different ways that staff can adjust. Let's talk about just attrition, not refilling, positions that aren't filled right now. There was a list, so maybe I'm on the wrong slide. There was a list of things how staff could respond. What best describes that, I think it still is on 19. So if we were just, I'm not saying I'm advocating for this or against it, but if we just didn't refill positions, one of the four on slide 19, so I don't think that, oh, no, you were, I think you were better representing it jc yeah no no it's that one so thank you you you you saw what i was thinking so thank you uh attrition what best describes staff's response from this list just so i can kind of understand because in my mind it could be just not refilling. And you're talking about level of service. I understand why you're doing it that way. But if it were, if we were just not to rehire, which of these best accomplishes that?

Well, we utilize a little bit of almost all of them. It'd be hard to pick just one important one because it would depend. If we were just to not fill positions and not change one of the four dials, then we would need to look at outsourcing that. We can't just not have that workflow, that work product that's coming from an FTE not happen anymore. So we would look at, okay, we'd have to look at contracting. It'd be a reverse of what we did for the meter readers. Let's say we had two meter readers that all of a sudden became open at the same time and we're like, you know what, we're not gonna fill them. We can't stop. reading meters, so then we'd have to go look at contracting out, unless we change the level of service somehow.

And I'll add on to that. Thank you. So not filling an FTE is not going to provide the same level of service if you keep all things equal, right? And so if you do not hire one more person, right, and choose to close that, that means that level of service has to inherently go down, or the response time has to inherently go down. Yes, do you save in the cost, but you're changing something else as to what the community is currently being provided.

So, that was more on the lines, actually, of what I was trying to get at. So, level of service would go down if, through attrition, but theoretically, not even theoretically, in actuality, it's that way now, right? with several unfilled positions, or maybe theoretically, there's maybe different ways that the city's pulling up the slack there. But when you look at this list, would it be like the first thing you would do, or is it department, depend on the department, consolidate and coordinate work? is one that jumps out to me as something you would do first, and then shifting delivery methods. I mean, is there like a flow of how you would address this, or already do? Oh, I see, I see, yeah.

It sort of depends. Let's say it's shift work that we're talking about, and let's say we're down, which we are, I think five to seven police officers, or eight, well, including the lieutenant. We're down a number of police officers. So does that mean we're not doing 24-7 anymore? No. Staff does not have the ability to change level of service. If it was dire straits to where we could not provide 24-7 anymore with the vacancies and through attrition or whatever, we'd have to come to you and we'd say, we've got a problem. So from that kind of perspective, with those vacancies, the level of service is staying the same. And so what we're doing here is we're deploying staff differently through, or not differently, but we're, it's overtime, additional overtime is being paid because we have those openings. But we're not changing the level of service. So it depends on whether or not it's a, one, a required or mandated level of service. If it's a level of service that's internal, external, with that vacant position. And so at some point, there could be some things that, from an internal service provider standpoint, like say, for instance, GIS. Well, maybe our GIS turnaround time isn't that great, because we have a GIS tech that's open right now. So things are having to just sort of sit, and we have to truly prioritize. And that means some things aren't getting done when some things are. So we sort of have to start prioritizing without trying to change the level of service. And of course the external level of service is the things we don't touch because that's council, but we would potentially have some internal level of service things which will create some gumming up of the system, which will have other effects on other departments or levels of service also.

Okay, thank you. And so, have you ever done an internal study about, let's say just, I'm going to call it response time. I'm not even talking about police and fire, actually, when I talk response time. Just maybe, I mean, globally, all of our departments. Have you ever done a study about when we, let's say we don't refill a position, at how much that has reduced? risk level of service response time has there ever been an internal study that so we can kind of know hey this is what happens when we don't fill this or or this is what happens when we so is there ever been a global study like that that the city has done

Not from an ex, we've done our performance auditing vision enhancements.

Thank you for giving the word to it.

Yeah, no problem. That's what PAVE stands for. And we'd be more than happy to start those up again. That addressed sort of the level of service that's provided and the amount of resources that are focused on that and how we are compared to the industry trend on things like that. So when we have, we have not done, I think, an internal study on how that might affect level of service from an external perspective or even an internal perspective. We've just been very flexible with us internally by recognizing that things get slowed down here or there. For instance, when we didn't have a city attorney and we're going through city attorney process or like I mentioned GIS, The expectations, or even HR director, the expectations of some of the things that we push through HR at this time have been slowed. I think all of us here at the table, all the department directors, can definitely attest to that. Because we're suffering those things that are just put on the back burner. But there hasn't been formal studies on that, and nothing that has affected, again, the external.

Would it be possible to do something like that? Or would it be, what amount of work, would it be a year long? Would it be a month long?

I guess I would need to have more clarity on exactly what your outcomes would be looking for, and then I'd be able to give you a better idea on what kind of.

Well, if it were like department-wide, for each department. And we're going to assess levels of service and maybe even add in what it would be like to, when possible, contract out, not contract out. So those would be a few. I'm sure there's more too.

Yeah, no, that's spot on. That's sort of like the, that was sort of the, One of the reasons why we created the PAVE project, and it answers those type of questions that you're asking, and they usually cost, depending on the size, I mean, IT's a lot smaller department than, say, community development. So, you're running anywhere between 35 to 75 or $100,000, depending on the budget. Now, public safety, when we did public safety, it was over $100,000, I think, but it was a huge study, and it took a long time. That answers those type of questions, and it talks about level of service, and it compares our level of service to other communities' level of service, although I think we have a good, I think we know how our comparators are. I think Bradley could probably talk about how well we are processing applications compared to some of the timelines that are expected in other communities. and I think we're setting a good high standard for that. So yes, we would definitely, that's what I would encourage and it would be, usually it's like a six month period and with the PAVE project the way we did it is we had some staff members associated with it and we had some council members associated with it and then we had the external consultant come in and they worked together through a usually six month period or something like that and did the PAVE projects.

Okay, thank you. And then I may have a few more questions, but I'll just have one more for now. Jason, you were talking about the two positions. I was just curious if when you were talking about the techs, if you were including things like PERS and insurance and things like that.

Yeah, I was referring to a billable rate, and I was pulling a number out of the air. I could be slightly wrong, but I believe it's in that range of numbers. But the city engineer does not get PERS. They're not a city employee. They're just a contract employee. Right. That's what I meant.

So, when you were talking about having the techs, you gave, I think it was $30 an hour. I don't remember exactly. It's okay.

It's in the $30 to $40 range, and that would be a loaded rate is what I was trying to convey.

But it did, so that included PERS and everything?

JC's busy like doing his calculator.

It's probably closer to 45.

Did you catch that? Probably closer to 45.

Oh, OK. Thank you. Yes.

But well below the $150 an hour.

Joel, do you got any questions? Well, first off, I want to thank you for your openness and transparency. I think that's very commendable, and as we move forward, and essential to a city. So thank you for doing that. On the subject, on the first slide, you have supports all of council's goals, public safety, fiscal stability, economic growth, housing and houselessness, infrastructure. I would add one to that, and that's public administration. which is like the non-union bargaining group, a lot of that, but it's how we administer the programs. I know in the Forest Service, when we had to deal with reduced budgets, that was a big subject on how we administer the programs. And there was a lot of consolidation based on employee to employer ratios and things like that. So I would encourage us at least to consider that. I wouldn't ask you to change the slide at this point in time. The question I had was, I had a couple questions. Probably the major one, when you talk about the fiscal year 27 general fund budget, and you talk about current revenues and current expenditures, and those are estimates, correct?

Yeah, budget is an estimate, so that's a correct statement.

sorry i'm getting there yeah that one right there those because fiscal year 27 has not occurred so those are estimates correct okay and the uh expenditure estimates uh assume um 100 staffing and everything filled correct correct which has never happened correct and you could argue it never will happen yeah and probably never will happen yeah um So those numbers are a little bit misleading. The question I had was the 25% was the floor for our balance in terms of what we have left over at the end of the year versus expenditures. And we're at, well you showed here, we're above 30%, correct? And... we're carrying a significant more over than what we thought would be necessary for beginning the next fiscal year and we've done that for the last ever since i've been here correct uh kind of sorta depends on how you look at it so that 15 million dollars is what we budgeted for our beginning balance and i'm not suggesting we go down to bare bones no no but i'm going to show you like you kind of miss

REPRESENTING CERTAIN THINGS SO WE ESTIMATED THAT WE WERE GOING TO START AT 15 MILLION DOLLARS AND WITH THE LATEST NUMBERS SLIGHTLY BELOW THAT AT 14.8 SO WE'RE COMING IN LOWER THAN THAT ESTIMATE BUT IT'S NOT INCORRECT TO SAY YEAH that yes, we've always been above the 25%, which is why council made the decision to change the policy away from what we used to do, was the budget was the floor. And council has changed that now to the actual financial reporting. So budgetarily, we can go below that 25%, which we set that at 19.2%.

It was a little bit confusing because I saw different numbers in different sections, and I think you've already covered that. But the percent of fund balance to expenditures for 2026 is 36%. that was where we started the year okay where do we end the year about 32 32 okay and the minimum is 25 that's correct and the trend between those two is down uh it looks like you got another two years before you even get to the minimum um so what is I understand your conservatism, and I appreciate that, but we're also talking about public dollars sitting in a bank account, not being used, and then cutting services at the same time, or increasing taxes, which hasn't been brought up. And the bank account is there, and it's above the 25%. So what is the call for reducing level of service? at this point in time? I can start this if you want.

I understand there's a trend. Yeah. Now we're trying to give you the tools to make an informed decision. Are we there yet? No. But depending on other changes in policy, like the next presentation where we're going to talk about the police headquarters refinancing and spending maybe more money and keeping the current payment method, which is a balloon payment at the end, you're going to use those dollars faster. So you're going to have to have

level of service discussion faster you're gonna have to have sure a new revenue source discussion faster you're gonna have to have a reduction in service discussion faster depending on how you utilize the fund balance and that works both ways for example with a tourism tax the council previously decided two meetings ago not to increase the dollar amount to the police which would offset the general fund from the tourism tax So it can work both ways. You can have it increase your revenue, or you can have it increase your costs.

Is that correct? Correct. But I think we also talked about in that meeting as well that, yes, $50,000 could go to the general fund, but then you're changing your capital outlook of what Parks is getting for their replacement.

Well, we don't want to review that topic at this point in time, but I disagree with you from what I saw of the presentation when you gave it to us. Yeah. OK. Thank you for a good presentation, being open and honest. And I think we need to move forward. I just want to ask the question again, why are we looking at the level of service now when we're almost 33% above our minimum balance?

I guess the answer is, one, it was asked by council.

It was brought forth.

We talked about having a discussion about general fund stabilization at the beginning of the year at some point. But we feel as though it's appropriate and it's our job to let you know of trends that we see that could hinder the city in the future. That's why we're having this conversation. We're not telling you that you need to change the level of service right now. We're not telling you that you need to increase our revenue. We want to make sure that it's very clear and understandable that we have a trend. The trend is our general fund resources are shrinking.

So I understand that.

And we just then if that's the case and that's the takeaway, then I think we've done our job today, as long as council understands that and where you want to go with that. Sure. Is is for you to tell us what you'd like to do.

And so what what I hear you saying is we're above where we thought we were going to be in terms of our balance, which is projected for fiscal year twenty seven includes a full employment expenditure, which we've never had. and that dire picture that's painted on that page. And as we move forward, there are a lot of tools, including hiring freezes if we have to, to get things done. So that's what I'm taking away.

I would say financially right now, based off of this. You started the year at 15.8. Currently what I'm seeing is we're down to 13.7. So that's what the data tells me, that we've used more resources than we're bringing in.

All right. Indra, do you have any questions?

I do. I'd like to go back and reference the slide on staff adjusting the how for cost reduction. So, in that list, it appears to me that the only thing that can be done, because I would assume that staff, Aaron, you're doing all that, optimizing, making sure contracts are I mean really the only two to change are deploying staff differently or consolidating. So those are the only two options, would you agree?

I agree that those are tools that we all use. And again, like the example of the water meter reading, by looking at how we could look at managing contracts more precisely, that was one example, we've recognized that that was not manageable and the best for the city, we can save money and have better service if we did it in-house. So we utilize all of those on a regular basis, especially when we're looking at anything that's discussed at council, when we're looking at trying to manage the strategic plan and our work plan, those tools are all used.

Right. So to me, those shouldn't even be on the list, because we should already be doing them. And I hope that we are. I had a question about the police officers down eight. That's not because we lost them all. Can you explain why we're down eight, Chief?

We're still trying to hire police officers. Police officers continue to come and go. And we're having a difficult time recruiting good people. So a lot of times when we do hiring processes, in fact, sometimes the majority don't pass. And then there's training, and sometimes they don't pass that either. We just put a new person into the academy as of today, actually. And we do have some solid lateral interests. So when a lateral police officer comes to us, it's much easier. It's kind of plug and play, and we show them how to do business here in Grants Pass. But police recruiting and retention in general is problematic across the country. okay so we are we have eight open positions it's not that some are on leave or on medical or anything like that or does that add to it that adds to it we currently have eight open positions and we currently have at least the three officers from the shooting on administrative leave there's another individual out on a leave and maybe another one There's a lot of people that are on paid leave, Oregon, FMLA, just recruiting and retaining people in general. It's complex. It's constant. And we're just not seeing the numbers anymore that want to actually become police officers, but we're doing everything we can to get them in there.

Okay, which leads me to my next question because we talk a lot about how much are benefits or you know on top of salary, but we rarely talk about the cost of vacation time or leave time or medical housing it because city employees do get a lot of vacation in general, and there are a lot of chances by state for leave, and I'm not saying I'm against that in any way, but how significant is that to work efficiency and flow? Does that affect us in a significant way?

So the examples that you provided are extremely manageable. Our staff gets the paid vacation and that is all scheduled in through their work shifts and handled in advance. So that's not an issue. The big issue that we're having when it comes to that type of thing from a spirit of where I think you're going is paid leave Oregon. Paid leave Oregon is our biggest challenge. From a legislative perspective, that would be one of staff's recommendations is we need to do something with paid leave Oregon. It is difficult to manage the way it's written now, so that's the thing that's probably creating a big issue for us.

But I think just to go back to the point of vacation and sick and all the things that are provided as a benefit, I believe all the directors negotiate that when setting their level of service and the number of FTEs that are required, kind of builds that into their model of how many people they think they need to incorporate those benefits.

Right, because obviously if someone has five weeks a year or six of vacation, you need somebody to fill in to do the work when they're out, and that's one person. So I just wondered how much that affects it. And then you guys do a lot of reports. I mean, look at all this. We have them here in meetings, meetings. How much time is spent in meetings and writing reports and to me that might be a way to get a big reduction and more work efficiency. Can you address that?

So just from, let's just talk about like the individuals that we have sitting here at the table, the RX team and the ones that you work with on a regular basis. One of the things that was an efficiency gain for us was going to the meeting schedules that we have today, which is every other week we have a workshop and a business meeting primarily, right? The first and third Wednesdays you have the business meetings and before that you have a Monday workshop. We used to have Monday workshops every Monday. And I believe, and maybe Karen can talk about that, but I know that when we were having to produce work product at the Dyess level every week, getting the stuff out in advance, we were really, that was a high priority for us, of course, but it did take more time than our system now does. So although we're pushing through the same type of, in the same amount of quantity of work, we're doing it more effectively and efficiently from a staff perspective because of our new schedule compared to the old schedule.

Is there any way to estimate what percentage of workload is spent producing reports or spent as time in meetings on committees and task force and all the other meetings you all go to? Is there any way to know that percentage?

General, I mean, if you take a look at our advisory committees, we have wonderful advisory committees, but like you're right, it does take a little bit of time to coordinate with the chairs or maybe the council liaisons on the agenda items. We get that together. I know Julie's working on that a lot with a number of the commissions and committees. So there's a lot of work associated with our office, and then there's a lot of work with, say, for instance, Bradley's department. He carries the largest weight of the advisory committees, I think, are primarily under CD. So it does require a lot of staff time to do things, but those have been essential service providers to you and when it comes to you know looking at policies and doing things for the community in general I'm sure we could come up with something I don't know if you would want staff to actually take the time to do that but it does take a little bit of time I don't know if any of you want to add additional time but from our office Karen's office it requires

lot of time for us to do because we've got to do the minutes we've got to do I'll let you explain you know it way better than I do well it is it's just coordinating the meetings the agenda items the material the minutes posting it on everything on the website making sure everything's public and we are currently getting a ton of public records requests which has a specific time frame and so that's just been really held in our office

Okay, thank you, and then last question I think from me. I talked to Erin a while back about the URA, and so I know there are a council initiated that and there are benefits to it, but regardless, irrelevant of the benefits to doing it, JC, do you know if we moved, got rid of URA and that money went into general fund, what is the amount of money that would be?

I don't think we just get to keep it all. There's ORS of how that needs to be distributed, and I'm guessing it has to go back to the taxing districts proportionately. It does. So I think right now we're a little bit over $6.5 million as far as fund balance right now. I could probably find an old presentation and give you what each impact for taxing districts the URA has as far as budgetarily year in, year out.

Just you can you give a ballpark figure as to just how much of that if we eliminate would go to the general fund.

I want to say the city's portion is like 800,000 a year. I want to say that.

I think it's a little less than that. Last time I looked I thought I was around six or something like that. Maybe.

Thank you.

Robbie your questions.

So the first question I have that I think might help counsel a little bit is if staff could provide counsel with copies of most recent PAVE audits. I know that I think the most recent one might have been 2015 or something, but probably because that would give counsel an idea of what, a performance audit can do. There was, you know, one counselor mentioned something about can in-house, we come up with certain studies, well, there's an inherent conflict there, but when you do a PAVE audit, it's an outside auditor coming in, looking at a given department, and they are expensive, but that would give counsel a better idea of what a performance audit can do, and it actually was very illuminating, the last one that I know of was very illuminating about deferred maintenance and things of that nature, in-house we were just blind to, or just, it was building up and no one was really seeing it. So if you could provide counsel, Aaron, with the copy of the last PAVE audit, that would be very helpful, I think, for most counselors.

Yeah, certainly. We can provide them for all the PAVE audits that we've done, and we can do that if counsel wants.

You know, just to give, I guess, an idea why that, you know, will stay the bias or the conflict from internal versus external is, it can be important. This is a true case study. Back in 2008 in, was it West Linn, They were using the same auditor that the city of Grants Pass was using for our annual audit, Paulie Rogers. And Paulie Rogers gave West Linn a clean bill of health, your budget's fine. And it turned out that a performance auditor came in, they had some suspicions, performance auditor came in to look at things with a different viewpoint or a fresh eye, and the performance auditor found there was a $1.2 million embezzlement within the city that the auditor, Paulie Rogers, never found. And Paul A. Rogers lost a big lawsuit over that for being incompetent and all that. But my point is that outside fresh eyes can very often see things that internal view isn't gonna see. And for council to see what a performance audit can do, the ones we've already done, would be helpful. So to me, Aaron, I see your four dials, and I know that part of... Part of what I'm gonna say might be covered with one of these, but to me there should be a fifth dial, there should be an efficiency dial. And I'm not saying that I've ever seen this in Grants Pass, but we've all kind of heard stories where you see three guys standing around leaning on a shovel and one guy digging. Well, you know, how efficient are we actually, how efficient is actually all of our, all the service that we provide? And I don't know that looking at it just from an in-house perspective, we're gonna really see that. Just recently, and a really, really minor, really, really minor instance that came up that we had three staff members working on one small committee. And it was like, I just don't believe that could possibly be maximizing our efficiency. And that's the kind of thing that I think that the public wants to see, and that's the kind of thing that I personally would want to see, is an efficiency dial. And I don't know that that can be done in-house. But...

Well, the dials here were focused on level of service and the what, not the how. The eight or so lists on a previous slide that shows the things that staff do are associated with efficiencies. So this is council level of service when it comes to the what. And then the how, which is the efficiency aspect, is all of those bullet points there, which we utilize.

So I just also want to make a comment.

We talked about how the committees could, you know, some of our committees require staff time, et cetera. To me, our committees basically contribute things that are quality of life issues in the most efficient possible way because these are things that staff won't get to. Staff doesn't have necessarily the the bandwidth to do much of what our committees do. And our committees very often investigate things whether it's people on the bikes and the parks committee basically doing a lot of the footwork to create Dollar Mountain. But these things happen in our committees all the time. Our committees are doing things that staff don't necessarily have a driving interest to do and people on our committee people do. So that's a really efficient use of our time because there the only thing that staff has to require really is is the meeting minutes and someone to forward motions and things like that. So that's a really top efficiency way of getting some of those things done is our committees. But I question again the efficiency aspect of this and I think that an outside auditor in a PAVE situation is really the only way to really get to the bottom of that and whether or not we would ever, council would ever want to pony up and pay the big bucks for something like that we could only really establish that if council actually saw what a PAVE audit looked like and the benefit that it got in the past, because I think that's probably the only way that we can do it. So, if you could send those out, I'm sure that's just a touch of a button on the computer to send those out to everybody, that would probably be helpful. Thank you.

Any further questions? Victoria.

Yeah, I thought of another question while we were going along. Could you go to page, or slide 26? So people were bringing up some really good points. And if you look at 2016 budgeted expenditures and you look at 2027, that is quite a jump. And have we ever done any thinking about or talking about or even a study about what is causing our expenditures to double in 10 years? And I was thinking, and it's what made me think of the question, how much does paid leave Oregon account for that? I'm sure it's not all of it, but have we ever done something about answering the question, why have our expenditures doubled or so in 10 years budgeted?

So there's a couple things going on there. Throughout the years, the level of service has changed. So when you guys added 12 public safety FTE, that changes the level of service. So that's gonna be an increase to the cost in that form, just because you're adding more bodies. um generically in the general fund it's all people-based services so we're talking about parks we're talking about police we're talking about fire and people tend to be our most expensive expenditure at the city and unfortunately we have to have those bodies to provide those kinds of services and so uh unions contracts and other things come into that uh there's things out of our control uh insurance costs pers costs that tend to keep going up. So again, I think it's more of the, we have a similar number of people, it's just the cost of those people is getting more and more expensive every year.

Yeah, that's what I meant. Have we ever looked at those expenditures over a time period and just so we would know where are these big, huge jumps coming from? And you said it's people, but of people, what is it? Is it paid organ leave? Is it PERS? Is it all What is it that's increasing the cost for people Which we want.

All of it. Paid leave organ is just part of the hand we've been given right now. And so the fact that people can be out, we have to backfill with certain overtime. So now we have to budget for those potential overtimes and those things happening. Can we potentially utilize some of the vacancy savings because we don't have 100% fully staffed to pay for some of these things and still provide the service? Yes. And so I think the question becomes more of a, do we want to change the level of service like we did in 2021 and 2023 where there was approximately two million dollar budget adjustment both those years to stay within that 25 budgeted parameter which changed the level of service have we ever done this sort of a study though just generally to would you be able to if we haven't do to do something like that I would say every year we evaluate the cost of what it takes to provide.

So you could easily pull the numbers basically.

Yeah, we could see the cost of a police officer, firefighter, XYZ going up every year. Unfortunately, like I said, that's what it takes to provide those services.

Right, exactly. That would be something to have in front of us that would be, it would be useful for me just to see, you know, maybe for other counselors as well.

OK, further questions? We've got Rob.

Could you clarify, is family medical leave part of paid leave, Oregon? I don't understand. So can you explain the difference?

Yeah, so FMLA utilizes what we give as a benefit as far as sick and vacation. Paid leave organ is outside of that benefit package, and they can take that in lieu of and not have to use potentially any of their accruals as a benefit that we give. So the state provides that on top of what we are already providing. And that's why we were talking about having legislation change that, because government typically has given all of those leaves to incorporate those kinds of incidents, or paid leave Oregon kind of double counts it back against us?

Right, so if I get this correct, then paid leave Oregon is kind of a duplication, and our program preceded paid leave Oregon. So, the question is, why do we have both? Why do our employees, why do we pay, basically, grants pass twice? Why are we paying twice? Because we're paying our employees out of our local budget, and they're also getting duplication of services. Why can't we cut the one that's within our- The state requires us. So, we have to have duplication of that?

Have to provide it.

Thank you.

Further questions? Indra.

Do we front load sick pay or its accumulated basis?

There were some recent contract changes. So for new people in certain bargaining units, we did front-load 40 hours. That was a response kind of post-COVID. What we were finding when new people came on, they would get sick and then come to work sick because they didn't have leave balances. So we have decided to, in some bargaining units, give some front-loaded sick leave so those people, A, don't come into the office, and B, there's a benefit for them to have that and continue working here as far as a benefit as the package. Again, we found that it's paid off because people are more up to stay, as well as not passing it around the office. I would say that since we've instilled that, the benefits are way outweighed. Now, as managers, supervisors, we should be monitoring that if somebody's trying to abuse those front-loaded leaves.

Which employees are front-loaded and which aren't?

Did you group them, or you do one by one? I believe it's Teamsters and the office GPA group, which is going to Teamsters. So they're one and the same.

Thank you.

Any further questions?

Joel, question. I just had one comment.

Sure.

Go right ahead. So the trends are unsustainable. You're right. And you either need to cut the budget or increase the funds. It's not just Grants Pass. It's Talent, where they increase their sewage Water bill, it's Portland. Portland is hurting, they're way over. This is non-sustainable. The wage differential between the public and private sector is getting larger. And it's just not sustainable. We're not going to solve that here today. And for Grants Pass right now, where we're at, I don't think we need to, especially with level of service, because we're not to a point where we need to take some action, I don't think.

Last call for questions. Yeah, one second. Okay, thank you, JC. All right, so basically this was a presentation for kind of educational purposes to continue and to start and continue a conversation in regards to our contingency. so um this is sparked out of a question by council um in regards to vacant positions and if we could kind of get rid of some ever floating positions that we don't readily fill on a regular basis which brought us back to the conversation of level of services of the service that is provided by the city and the staff that provides them as well as the deficiency in our contingency or the depleting contingency that we have on our budget so with all that said and the questions answered i would be looking back to council to see if you want to continue this conversation If you have any specific direction that you want to impose on staff to get some more information that have other converse, continue the conversation. So I would be looking for direction from council and I've got Victoria and Seth. So I'll go with Victoria first and then Victoria, Seth, Rick, Victoria.

Yeah, I think it's great that we are starting to talk about this now because we're going to have to talk about it soon. And So it's really good to get the information before us and I thank you for the information today. It's really good and it's a beginning. I think that we owe it to, most of all we owe it to the citizens of Grants Pass to show them what the services the city is providing and why the expenses are increasing and then to give our best judgment as to how we can steward their funds. And so I do kind of like the idea of looking at the study, some kind of a study where we could figure out, well, you've already kind of outlined it with your four levers. I'm not exactly sure what that would look like, but I think earlier I kind of mentioned a few things, and that might be a place to start, and I'm sure other people have things to add to it as well. But I think it would be very important for the people of Grants Pass to know why these costs are increasing, because I think when you started the presentation, JC rightly said that people kind of think that government just spends, spends, spends. And that's not the case. And I don't think that's the case with our people here in Grants Pass. But the expenditures are so great. And it always comes back or it often comes back to something that the state is mandating. And it would be really helpful if that was front and center so people could see, so the public could see. and then they would probably have a better understanding about how we could go about attacking, making sure we stay within our budget, not raising taxes and all those kind of things. So I think today was really good, so I thank you for it. And I think we do need to look, I don't know if it needs to be an outside, but I don't know if you feel it could be done internally. So maybe that's something you could comment on a little bit. Could all those things be done by staff? What time would it take? Or would it be better to do something outside?

Yeah, I think there's two things that I was catching from what you're discussing. One is, can we give a report to council that maybe council could also utilize as an information opportunity that would sort of show maybe the last 10 years and what costs have risen and why. And maybe focus just on general fund. So we talk about, you know, general fund is 82%, it's personnel, here's the personnel. We could do something like that, I think, to sort of show some of the costs and why you're looking at the numbers you're looking at. And then the other part when it comes to the performance auditing vision enhancement project we'd be more than happy to start that up again i will forward you the links and or if you want hard copies of our past pave ones except for maybe i won't print the public safety one because it's about this thick but um those will all be available to you. And take a look at those, see if that's something that you're like, you know, it might be nice to start these up again. And then we can take a look at which one you'd like to start first, or I can give you an idea of let's go through the departments and go this way, and do that. So hopefully that answered sort of your two questions. We'll get you something on a general idea of costs associated with city services when it comes to general fund and then take a look at the page and we'll see if you want further direction we can move forward with those also.

Yeah just a couple of things I think overall the cost or you know it's just just known it's going up everywhere same in the private industry same with my business so it's one of those things that you know it's just whether the economy is going up or down. It just really depends. A couple things I would like to see potentially, and I do agree with Rob on the efficiency dial piece of it, and I understand that's a, you know, more focused on the staff and not necessarily like a council directive. But I would be interested in studying efficiencies more within staff and how you guys operate on a day-to-day basis when it comes to efficiencies, what metrics you're using. I know you mentioned like potential timelines or benchmarks for certain departments, like the planning, right? Like how many are, you know, if somebody comes in and puts in a request, you know, how many are you getting through in X amount of time comparative to what benchmarks are we looking at? So, that's one that I'd be interested in, because I think the efficiencies, and that's, you know, again, that goes with any company, any government. It's just, at the end of the day, as you grow, as you get bigger, efficiencies can drop. So, I think it's an important thing to take a look at as we move forward, because that can also end up saving money, or just, you know, we can get more done with the same amount of people.

Thanks.

Rick?

I like having the level of service being presented this morning because I think our next presentation on police headquarters, I think that can become part of the discussion. Thank you. Perfect.

Anybody else? Andrew.

I too am in favor of looking at the performance audit and I think that might be an important thing going forward. Just a little comment on where I'm at. Obviously with the trend, we're gonna have to look at things and while we're in good shape now, I think now is the time to really start buckling down on some things that we spend money on now. So I don't think we can go on spending the way we are because We don't have to worry about it for a year or two or three. I think we should worry about it now. We obviously need to start prioritizing as a council, prioritizing what's the most important to us, to our citizens. And using those priorities in the way that we vote to spend funds and I think that should be something that starts now not later I would also be interested in looking more at the URA I mean if that's something that brings in 600 or 800 000 or um you know that's enough to to pay our debt down in three years instead of refinancing. So I think we need to look at every little bit because the one thing I don't want to see is increasing in fees for our citizens. I would rather see a reduction in levels of service in certain areas rather than see our citizens burdened with more fees and taxes. And with that said, it's because, I mean, just like any household, you need to live within your means. And when you don't have enough money, you have to prioritize the things that are most important to you. And maybe you do have to let some things go a little bit. And so that's where I'm at personally.

Joel. And I think the one thing left unsaid so far, and it's very important, and that's you can cut. The main thing is personnel, so you'd have to cut personnel. I mean, you don't have a whole lot of choices there. It's pretty lean. The other thing is you can grow your way out of this. You can grow your way out of this. That's economic development. That means handling our social problems in a socially acceptable manner, moving forward, attracting industry, good schools, good fire department, good police department, good tourism. and grow your way out of this. And I would encourage everybody to look at that first, because that's a very positive thing for everybody.

All right. Do you have direction? Because that was a bit preachy, but I think we got some direction on this.

What I've got to make sure the expectations are clear is we'll get links to the PAVE audits, and if you want any hard copies, let us know and we can print those for you. We're gonna also talk about the, or provide you a memo on sort of a breakdown, general breakdown, not in huge amount of detail, of costs and looking at the costs and why we've seen some increases.

For the general fund.

For the general fund, correct. And then also, there was an item that Councilor Bennett mentioned about benchmarks for services and efficiencies. And we can look at providing you a memo on that in the future also, if that's something you're looking at.

Okay.

Does that catch the spirit of the discussion today?

Any other questions or anything to add to that? That's pretty much what I had noted also. Cool.

Thank you.

I appreciate that. Thank you very much. We will move on to the next item on our agenda, which is police headquarters refinance. It looks like J.C. will lead us with a presentation.

Hello again. I'm gonna speed through some of this because it's a repeat of two weeks ago. So just as a reminder, May of 2019, city council authorized a full faith and credit or FFC for the public safety building. Full faith and credit refers to a legal pledge by a local government to repay its debt using all of its taxing power to meet interest and principal payments. And so this is general fund backed and this utilizes our property tax dollars. June 6, 2019, a full faith and credit debt service was awarded to Wells Fargo for the building, which is about $6 million. A 10-year loan with seven-year call or refinancing payment option, about 2.5% interest. Each payment's about $510,000 for the first seven years, and the final three years is about $1.1 million, which is a $600,000 increase, and the remaining principal is a little under $3.3 million. In your packet in front of you today, there is Exhibit A, which is the white piece of paper. That is our current payment plan as far as repaying the debt. And you can see the three, and I'll get on my pointer again. You can see the last three payments that are quite significantly larger than the previous years. So why is that important? Budgetarily, council has authorized a spending of up to 19.2% of the general fund balance in fiscal year 27. The policy, however, is measured by the ending annual comprehensive financial report. That requires a 25% fund balance of the general fund. Increasing the debt service would draw fund balance in the general fund down, holding all other factors constant. So about $460,000 right now is approximately 1% of the general fund fund balance. So we did get a proposal submitted by the community, which would be potentially utilizing ORS 294.468. And I'm going to read all of this because I think it's legally permissible is what we should know. So this is for loans from one fund to another. SECTION ONE SAYS IT SHALL BE LAWFUL TO LOAN MONEY FROM ANY FUND TO ANY OTHER FUND OF THE MUNICIPAL CORPORATION WHENEVER THE LOAN IS AUTHORIZED BY OFFICIAL RESOLUTION OR ORDINANCE OF THE GOVERNING BODY. MEANING WE CAN INTERNALLY GIVE ONE POT OF MONEY A LOAN TO ANOTHER POT OF MONEY AND ALL COUNCIL HAS TO DO IS AUTHORIZE THAT VIA RESOLUTION OR ORDINANCE. Section 2B, if the Interfund loan is a capital loan, set forth a schedule under which the principal amount of the loan, together with the interest thereon, at a rate provided for in paragraph CB of this subsection, it is to be budgeted and repaid to the lending fund. The schedule shall provide for the repayment in full of the loan over a term not to exceed 10 years from the date the loan is made. So we're gonna have to set a schedule, set an interest rate, and then come up with what that payment plan looks like back to that fund. Section 2, subsection C, if the Interfund loan is a capital loan, provide that the loan shall bear interest at an annual rate equal to A, the rate of return on monies invested in the investment pool under ORS 294.805 to 294.895 as reported under ORS 294.875 immediately prior to the adoption of the ordinance or resolution authorized by the loan, or be such other rate as the governing body may determine. If the Interfund loan is an operating loan, provide that the money loan shall be budgeted and repaid to the fund from which the money is borrowed by the end of the ensuing year or ensuing budget period. What does all that mean? OK, the first section says, OK, we're going to do a loan, and you have to charge out a rate. You can peg it, and I printed out our investment policy. You can peg it to something that is measurable at the time. And so on page two on the bottom there, you can kind of see that the city's average effective portfolio yield is about 3.8% as of July 31st, 2026. And then the LGIP, which is kind of like our risk free rate from the state's investment pool is 4%. 2D is talking about an operating loan. So if we take out a million dollar loan, you have to pay the million dollars back next year is what that says. So, Section 5, Subjection A, a capital loan means any interfund loan or portion thereof made for the purpose of financing the design, acquisition, construction, installation, or improvement of real or personal property, and not for the purpose of paying operating expenses. And Section B, the operating loan means any interfund loan or portion thereof that is not a capital loan, including any interfund loan or portion thereof made for the purposes of paying operating expenses. What does that mean? I think that... Technically speaking legally it qualifies as a capital loan because debt service payments of what you're trying to potentially backfill are not considered operating expenses are considered non operating so I believe we would fall underneath the capital loan provisions in this or s. So the proposal so continue with the current debt service contract which is. Exhibit a white piece of paper again. However the general fund will only pay about five hundred south seven thousand of the larger balloon payments and then the equipment replacement fund would give the general fund a loan for the for the difference in each of the three years so the equipment replacement fund currently holds nine million dollars it holds all the police parks. fire vehicle equipment replacement funds that we build up over time, so that way we're not spending millions of dollars all at once. We can kind of smooth that out. And then interest for the loans would be about 4%, as again, by the investment report. And then they're subject to change per the ORS and the timing of the loan. So what that looks like, what's proposed numerically, is this on the screen right here. So currently, the orange section is what our current debt service payments are. The proposed refinancing was the eight-year refinancing that I brought forward two weeks ago. And then the plan would be that the general fund makes a $507,000 payment, and then it would take a loan out for the remaining difference between this $1.1 million and this $507,000. So it would take a $634,000 loan out in year one. Year two, it would pay less because it's still gonna pay the same 507,000, it's gonna pay 401,000 and then make the first payment on the first loan. And so that net difference is taking out another loan for $743,000 in a future year. And then finally, that third year, the general fund would pay $259,000. It's got two loan payments to make back to Equipment Replacement, and its total loan would be $881,000 back to Equipment Replacement, again, as a draw. So it smooths out kind of the draw it's taking from Equipment Replacement, and it's also taking advantage of the current payment plan that we have. This is 2.5%, and we can potentially utilize I lower interest rate internally. So what is the risk? Because it does look a lot better, this $3.79 million and this 4.1. So the risk is the estimation that we got, which is the blue sheet for the eight year. If you'll look at the top, the consultant provided us with a half a percent cushion. So the potential is that the refinance actually doesn't cost us $4.1 million. It potentially costs us less because this is going to go out to competitive bid. And so the interest rate could be well below that 4.85 and could be closer to 4.35. Rates are going up. There's an uncertainty there. So the risk is potentially the refinance would be lower than what is Proposed right here. The other is this per ORS the three loans in out years Are subject to when you take the loan out? So if interest rates go up drastically over the next three years you're going to be subject to a higher interest rate as we take out those loans from the equipment replacement fund and And so this gap potentially from this 4.1 to 3.79 could shrink. If you look at the breakeven point, is it 7.5%, 8% potential that it would have to get up to for this to not work and pencil out? That's the potential there. And that's why, again, we brought it back for consideration because it did sound crazy. I've never heard of using an Interfund loan like this before. It kind of seems like it's a take your check to a cash now place, and then you'll get your paycheck taken from you later, and you'll have the cash in your pocket now. Luckily, we are the loaning agency in this, so we get to choose a lower interest rate than what those may provide. So the call to action today has changed a little bit, depending on how you guys wanna proceed. You could table this discussion, because we really don't need to bring this back to you until January, February of 2027, because our next payment isn't due until June. And so then we could make a plan then. We could pay off the $3.2 million plus the interest. We didn't consider this as part of the Interfund loan before because $3.3-ish million plus is about 38% of the equipment replacement fund. So that seemed like way too high of a balance to utilize as far as just one failed shot. But if you're going to go with the current plan and the proposal, that seems to be closer to about $1.8 million as far as over time of what we would be asking of equipment replacement, and that's Exhibit A. You could still go through the refinancing. I gave them the examples. We have the 8-year, which is in blue, the 10-year, which is in purple, and the 15-year, which is in pink. And with all that, I will take any questions you may have.

Oh, sorry. My mic was not on. Thank you very much. Questions? Rob?

So, JC, the savings then would be coming from the fact that we're charging internally, we'd be charging ourselves a lower interest rate than we're getting from an external source. Would that be accurate?

While still maintaining that 2.5% savings plan. Does that make sense?

No, I don't understand.

So, the current contract over here is at a 2.5%. And so you would take microloans for the 4%, so you get that net savings of keeping this first part at 2.5% as well. That's where the big difference comes from.

Okay, so the fact that we're basically locked in at a much lower rate than we could go out and get it today from, plus the fact that our internal funds are going to be kinder to us. Okay, so that's the savings.

That is the perceived savings. Again, there's a risk there because interest rates could go up and we're back into a similar situation.

Thank you.

Andrew, any questions?

Joel, questions.

Well, I'm kind of dead sometimes, so you have to explain things to me here, which I appreciate. Under Loan 1, 2, and 3, there's no payments throughout the year 2024. Is that correct? Or does the general fund, that 507 is consistent across Loan 1, 2, and 3?

So, the general fund's contribution is consistent for the first three years. How it gets its money from the equipment replacement slightly changes, and what that equipment replacement loan payment back is slightly different. So, you can see these loans go up over time because they're making loan payments while they're taking out the next loan. So, to keep the draw on the general fund at that similar $507,000, we would basically make a payment in consideration of the loan payments as well, which keeps you underneath the out years of that $507,000.

Okay, so loan one, two, and three have the same general fund contribution that is listed under the third column.

That is correct, but their actual true dollar amount going to debt service slightly changes every year because they are making those loan payments.

And then the only difference between loan one, two, and three is the amount we borrow. the one why why would we borrow different amounts because the general if the general fund contribution is the same for loan one two and three why do you have different different options for the amount we borrow so let's look at it a different way so the first year the general fund is truly going to make one check of 507 000 and equipment replacement is going to make a check for 634 000.

The next year, the general fund's gonna write 401,000 to debt service and $105,000 back to the first loan for still a total net draw on the general fund of 507,000.

OK, OK. So I think I understand. So what you're saying is that $634,000, for example, under 600, yeah, I guess it's $634,000 under loan one, that then plus the general fund payment equal to $507,000. That is correct. And then, OK, and so then as you go, and then let me see. We got those three years. That covers the existing loan.

then after that we got to pay back the 634 000 loan you have to pay back all three of the loans all three of the loans yeah so you're going to take out micro loans every year for 634 743 000 and then 881 000 so what that's a little bit over 2.1 million dollars

Okay, you lost me.

So the current contract says we need to pay $3.4 million. Okay. We can only pay half a million dollars a year. So the equipment replacement fund needs to make up that net difference of the 2.9-ish million dollars. By taking out small loans in the out years, you decrease potentially what a refinancing would require.

So then what I don't understand, if I understand, I don't understand you correctly, but if I, my understanding is such, okay, let's look at 2030. We got a payment of 105,000 under loan one. And that's paying off the $634,000 loan, correct? Yep. Okay, and there is no contribution from the general fund to either loan.

because we've already paid the current contracts that ended in 2029. So all that would be left are the three microloans at that point.

So, okay. So the present net value then for the 3.4, we owe $3.4 million. and the general fund is going to contribute 507 the first year 401 000 second year 259 the third year loan one which we get an inner fund loan for 634 000 is going to pay 105 000 off of that 3.4 million every year

From year 28 to 34. You're only taking out $634,000 in the loan. So the 4% for seven years is approximately a total of $105,000 payment. Okay.

And so that's not the payment of the general fund repaying that loan? That's the general fund repaying that loan?

That's the general fund repaying back our own internal funds. And so the next loan, too, is $743,000 for six years at a similar 4%.

Case alone, one, two and three are not alternatives there. It's loan one plus loan two plus loan three. That is correct. OK. That makes sense.

Victoria.

So we did the the we chose the your choice last time because it was going to be easy year over year. This is even easier year over year. But you say there's just a little bit more risk because the rate might go up. Am I accurate so far?

Yeah, I wouldn't call it easier. It's going to be the same amount of work, more or less, to track, monitor, pay the right things. Oh, OK.

I just mean bottom line for

there is less of an impact over time to the general fund and what the the proposal is getting at is we propose 4.1 million dollars over eight years for the refinancing and if you do a general fund contribution plus three micro loans that's about 3.75 million dollars and so the net gain is we're paying less interest over time okay and so

You can't necessarily tell us risk assessment, but what's your comfort level with this risk assessment, I guess, would be my question.

Again, I think the break-even point's around 7.5% to 8% that it would have to get up to. Will it get there? It could. or do rates go down? That could be also another risk or a benefit to this whole, but the risk is that if we go out for a public bid, the potential cost of the refinancing is less than the $4.1 million that was estimated for us. And then, Subsequently, if interest rates keep going up, which is why I was trying to push this to the forefront is interest rates are going up right now. And so trying to lock in what a refinancing could be sooner rather than later. But if you want to be a little bit more risky, you could take that chance and potentially even with a higher interest rate, we could still potentially pay less than refinancing the whole thing with this plan.

Thank you. And then One other question would be, have you seen any other examples in other cities or within our city that you could compare this to?

Never. Internal loans are typically out of a case for emergency. So most of the ones that I've dealt with were in that COVID time period. And so people were taking operating loans out because maybe they weren't getting TLT dollars in because people were traveling less. And so then there were still obligations by those programs to meet pay vendors and or other consultants that were linked to those programs so typically it's like a last resort this seemed again when we when i read it it was very hair hair brand kind of but as you do the numbers and you start doing the math uh it seems to work thank you rick

Thank you, JC. So in the first column with 3.4 million, that basically represents the principle of the amount of money that we need to pay off.

Principle plus interest.

Plus interest. Okay, and that contract does not become effective until June 30th, 2027, if we go that way?

No, so we currently are underneath that $3.4 million plan. So you have 3.2 million, 3.3 million in principle, and there's a little bit of interest associated with that. And so this is just the continuation of what we currently have, plus taking out a kind of a, I don't know what else to call it, but kind of like a net reduction every year with microloans.

Okay, so at one point it was mentioned in a previous presentation presentation that we cannot do prepayment?

You could do prepayment. The problem potentially with prepayment is you're going back to the level of service discussion. You're utilizing the general fund balance to make that prepayment. So you're drawing those funds down depending on how much you want to make that prepayment to be.

So if the anticipated general fund balance is 32%, we want to come down to 28%, which would be 4%. And you indicated each 1% is just under a half a million dollars. So if we were to take, if we decided to go that way, go from 32 to 28%, and we took $2 million and put it against that loan, what would, How would that work?

It's an interesting concept. So a couple things there. Obviously, the general fund fund balance goes down. You would be forced to refinance because you are now refinancing on the bank's loan, not taking $2 million. It doesn't work like a home loan or a mortgage where you can pay extra money up front, and it lowers the out years. So what it would do is we would be forced then to utilize that fund balance, but we would also take out a loan that's smaller, but it would be at a similar percentage rate of what would be on the blue sheet, which would be a little bit higher. You could do that. The other fallout of that proposal, too, of utilizing $2 million of the general fund fund balance is you've now sped up the timelines of either increasing the revenue or decreasing the service. So I would need to come back to you very soon as to what that plan and what that education needs to be of what the solutions are. Because as you saw by the other presentation, that fund balance keeps going down by two to 4%. So if you put it at 28%, we're gonna be right at that 25% fund balance level really quick.

But if we're only doing this one time, and it's a capital expense, and it's not playing for personnel, so capital expense, you could do a one-time billing, and therefore, future years, you wouldn't be affecting the reserve, but only this year by roughly $2 million.

You're still gonna make a debt service payment, and the costs of the current level of service are gonna continue to rise. So your net savings, I get where you're going, there's a set savings there, but I think it'll be swallowed by the current level of service and what it costs to provide and what it'll cost to provide in the future.

And how much, how much interest would $2 million save, 2.5%?

Oh, it wouldn't buy down the interest. It would, like that, as far as like a home loan, it would more or less just change the amount of which we are taking out as a loan and still taking it out at 4.5-ish percent as a refi.

Okay. All right. Thank you. Kathleen.

Okay. Thank you, JC. So, it's inevitable that we have to take out another loan down the road. And that's why you're suggesting this Interfund loan?

Something will need to either be done either way. So whether any of the options that you choose, there will be a decision point that comes from that. So if you continue with the current payment plan, we're going to talk about level of service adjustments. If you refi, you can kind of extend that conversation a little longer. If you do the proposal that was submitted by the community you can kind of do a little bit of both things but There's going to be a discussion that needs to be had in the future no matter what so we are gonna have to do another loan either way Something level of service-wide discussion is going to have to happen.

Okay, so if it's an inner fund That means it's our fund city's fund why do we have to go to such a high interest rate why do we have to do a four why can't we do closer to 2.5 so there is legal precedent for uh two c's subsection b

can determine what the rate is too the problem with that is if you're taking them on the funds out of equipment replacement now you'll you're not giving that fund it's fair due of when we're earning interest it's not earning the same amount of interest that all the other funds are in the city and so it's gonna it's going to loan money at a net loss

Granted, the four is lower, but it seems like, so you're saying that's the lowest we could go with an inter-fund?

So with the inter-fund loan, you either choose that something that is measurable at that time or do something different. I would say we'd need to probably take a look at if you're going to do something different than what we're currently earning as far as investments. There needs to be a really good reason as to why we would change that. And if you're going to put it lower than what we're actually earning, you're hurting the fund that is loaning the money.

But you're saying it's better than going through a bank or going through another type of loan. It would be best to go through the Interfund.

It has merit to push forward. Again, there's inherent risks because you're talking about an interest rate that is out two and three years from now.

Because the Interfund changes as well?

Because the outside investment world is going to dictate what that looks like.

Oh, the first one can be locked in, but then the second one comes, and that's going to be different. Okay. All right.

So, yeah, I'd love to tell you the interest rate is going to stay at 4 percent from here until 2020 or 2030.

Thank you. Seth, you got any questions?

Yeah. So do we have to do the microloans? Or could you take a lump sum loan right now out of that pool of money, pay it off?

So you could take the lump sum. The only thing I would say, that's a lot of cash out of the equipment replacement for $3.3 million.

Yeah, and I remember we had this discussion, I think, during budget cycle, budget season, about, what, that $10 million. And I know it got kind of broken down. So I was just curious, is there any, like, historicals on average how, I know that the fund gets replenished. So I'm just trying to figure out, is, I know, I understand it's a big chunk. But how much of that are we using a year? I guess, is it something we could float year over year?

Do you know that?

It really depends year over year. If we have to buy a new fire apparatus, it can be anywhere from a million to $3 million if we had to replace a ladder truck. We're generally replacing three to five patrol vehicles per year. We spend 150 to half a million dollars to multiple millions. It just really depends on the year. As for what's coming in, I was just trying to get to that number because I heard the question coming and I was diving into the financials. But it's, you know, on the order of, I'm going to say close to a million dollars per year across all of the divisions. But I would, I'll report back in just a minute.

Okay. Yeah, because I was just curious on that. I get the whole concept of taking all that money at once. It's no different than the general fund. But I was just curious if there was room. Or, you know, we could even take $2 million of that, and then you don't have as many microloans. I don't know. I'm just trying to think of, because I understand that the loans, as they go out, the interest rate will vary depending on when the loan's locked in, right?

Yeah, and so again, part of the brilliance of this is you lock into, you're already locked in a two and a half percent under our current plan. And so you're only taking the 2.1 ish million, not $3.4 million of a lump sum over time. So it kind of reduces some of that rate exposure because you're locked in at that 1.14 million dollars that we currently have and you're only taking a loan on the access which is the four percent not the whole thing so if you took out 3.4 million dollars from the equipment replacement fund now we'd have to do 3.4 million dollars at four percent okay for the questions i had uh joel

Well, I think I'm beginning to understand. Could you go back to that slide? So, between the proposed refinance that you originally talked about and the taking out loan one, two, and three plus contributions from the general fund and the general fund payments on the right-hand side, it looks like we would save about $400,000 in interest. Could be. OK. And then the interest that we would pay would go towards the purchase of a future fire truck rather than the bank.

So, yes, that is why you put interest on those microloans is so it pays those funds back to the appropriate departments.

Okay, so we're paying ourselves interest to purchase vehicles that we need in the future. And if we paid more now, we would just pay more interest towards the, eventually that fund would be right side up. We'd have to suffer a little bit for the first five years. We live like no one lives now, which is pretty scarce, to live like no one lives later, and that's to have a new fire truck or whatever. This is my assessment, correct?

I think I lost you in the middle of that.

So, OK, so let me let me put it this way. So we can draw that equipment fund down, which means we can't, which means we have to get an extra year or two years out of vehicles and and delay the rotation of those vehicles. That's in essence what that means.

uh yes and no you want to take that yeah not necessarily um you're going to withdraw a total of two point three point four plus that what is the total number jc three point four $3.4 million out of it. The current balance is about 10. You may have to delay some of the larger purchases. But in aggregate, the fund is still healthy and will be able to replace vehicles on the correct cycle. What you're losing is just that long-term stability of the fund. So that's why that payback and accrual interest is so important.

But that would be regained after we pay it back, correct?

Absolutely. And it would be repaid with interest? Correct and the vehicles that the money is sitting in for each of those funds would still be accruing interest And we would just be relying on the fund payments from the general fund to go back to so why wouldn't we do that Jason I This is a great policy discussion for you. I I know when JC and I looked at this, we went, well, that didn't pencil out. But when we really sit down and looked at it, it works. It's different. I've never seen anything like it either.

No, I haven't either. OK. I know if it was my money, what I'd do. But it's public money.

That's a good point. It is public money, and I think that's why we were trying to take this refinance to you guys sooner rather than later as interest were going up. Because again, this is locked in potentially, and so we know what those payments are going to look like. The risk here is you don't know what this is going to look like in the future. And so we're not necessarily recommending one or the other. It's the policy decision of how risky, potentially, you want to be with this situation.

It'll work either way.

It'll work either way. The outcome may be a little slightly different.

One will be a little more squeaky.

Further questions, Inder?

J.C., you confirmed and then spoke more, Kathleen's statement about it's inevitable that we get a loan, but it is not inevitable that we take a loan. We can choose to pay this off in three years.

Yes, but it is inevitable that it's going to force another conversation.

Right. So, when you say, you said earlier we can't pay it, so what year could we not pay it? In next year, in 2027 or 28? Or 29?

So we're, I don't, maybe I'm confusing where we're going with this, but currently we're paying $507,000, right? And so if we increase that another $600,000, that means that we're having to utilize more fund balance because we're not bringing in the same number of revenues in the out years. And so if you continue with the current payment plan, it's fine, we'll just have to come back with how are we going to potentially stay above the policy, adjust the policy, change the level of service, or change for a new funding stream.

Right, so I'm asking what year would that be? Would that be next year? Or this year? You could probably delay it a year. So in 2028, we would be in big trouble without doing something.

you're going to get closer and closer so just to kind of give you a timeline perspective when we instilled the public safety utility fee that took council two years to do that through all the education and the final implementation right so there there's going to be some things that need to be potentially sped up depending on how you address this moving forward

So we could in fact pay this, we would just need to tighten our belts and or grow revenue as Joel suggested. So that's, we would need to prioritize is this important to pay or as Joel pointed out, we're saving 400,000 but we're really not saving, we're losing because we're refinancing. So we would need to make that decision how to go forward with being able to pay it.

Correct. And I'll just say that the same thing kind of ish and hopefully put it in terms that everybody else is maybe following what you're saying. So our total payment is $3.4 million right now. What you're talking about is potentially increasing that total due from the general fund to $3.7 million. What you're buying with in that refinance is only... $350,000 over 7 years, so a $50,000 a year extra payment to buy you some more time to continue a current level of service.

Any further questions? Cena, thank you very much and. You have been asked for some action today. So does any counselor have any questions in regards how to make a recommendation on going forward or does anybody have any recommendations on directing staff to go forward. Victoria.

Well I think that this the last time we made the decision it seemed like it was the best possible decision to keep level of service and things like this. But this is even better. So, but which of the five bullet points is the new option? Would it be for the call to action? Which is the new one to the interloan, inter?

That's under number three.

The third one. So, continue the current payment plan exhibit A, That's not OK. So that would be the this new option. So I would just go ahead and make the. Make the proposal to go ahead and do that to change from to go ahead and do the inner inner loan fund. The new option.

OK. So the decision for this needs to be done by January of 2027, is that correct?

Yeah, that would be comfortable, depending on which way you go, because I still have to potentially, if you go with a refinance option, you still have to put contracts and bids and everything out there for the public to do. So that would give us enough time before the June payment to be made, and then budgetarily what that looks like as well.

OK, so the decision doesn't need to be made today. We could still think about it for another month.

You could definitely do that.

OK, thank you.

Any further discussion? Joel, and then Kathleen.

Joel?

So if we go with the submitted proposal, it would save the general fund about $400,000. And JC had the exact figure. And then it would pay another $400,000 in interest to ourselves and the equipment fund. If we did the payoff, I'm just trying to compare those two. Now, if we did the payoff from the equipment fund, we would have $800,000 in interest going towards the payoff. And the general fund would be less of $800,000, but it would be drawn down, if I understand that correctly. looking at just option A and option B. I mean, it's all math. There's no position on this. We're just talking math. JC, did I lose you?

Was that a question? I love you, JC. I love you. I'm all check and see if you took out about three point four million dollars or four percent what that would look like as far as interest further discussion I got Kathleen and then Victoria so even as we're going along and before we take out each consecutive loan we could always decide to pay it off is that correct

So if we find that the economy starts doing better, as we find that things are rising, or more people are moving to Grants Pass, our tax base increases, some miracle happens, we could still pay it off. Yes?

So the reason why I was thinking it would be a good idea, I appreciate what Rick was saying, and maybe it maybe we should take a little bit more time to think about it. But the reason why I was thinking it might be good to go forward was when JC mentioned that currently those interest rates are going up, and so maybe that it would be the better option to just go ahead and do this now. But I do appreciate also that we may have a little bit more time to think about it.

Okay, you have a recommendation on the table to go forward to continue with the current plan, Exhibit A, proposal in utilizing the equipment replacement interloan fund for the remaining of the three years. You also have a recommendation to table for further conversation and because we have time. So, any further discussion before we kind of weigh our decisions? Indra. I'm just restating what's going on.

Yeah, thank you. I just want to state where I'm at on this. So I'm not in favor of robbing Peter to pay Paul. I understand that we could spread it out more and not be hit more in the next three years. But I also feel like we should tighten our belt and just pay it off and not burden our taxpayers for five more years $300,000 or $400,000 more, so that's my preference. With that said, among the choices that counselors seem to want to go ahead and refinance, I would be for paying it off, the first loan, and then adjusting the microloans accordingly, rather than stretching that out as well, as Joel suggested. Victoria?

It seems like what JC said, it would be about $50,000 over seven years. And if that were, which is not nothing, and it is taxpayer money, but the level of service would not need to be, you know, reduced. And so, the people are not, they're not getting nothing from this decision. They're probably, I think all things being equal, maybe gaining more by doing this new Interfund loan, so then they would be losing. So I think that I would just continue to want the Interfund loan because it just seems to make the most sense.

Further discussion, Rob? So, JC, to clarify, either way, I shouldn't say either way, to be specific, whether we were to take the newer proposal that basically would pay $400,000 to the Equipment Replacement Fund, In other words, today's proposal, the newer proposal, that's an inter-fund loan, and if we were to pay it off, it's also an inter-fund loan, right? Because we're still gonna be borrowing probably from the same place.

Correct?

Okay, so when a counselor says an inter-fund loan, either way it's an inter-fund loan. So one way our vehicle replacement fund essentially benefits over time, it makes $400,000. on us as a customer. The other way the equipment replacement fund would make, in other words if it did the larger inter-fund loan, it makes $800,000 that we would otherwise just throw away to a financial institution. So they're both inter-fund loans, both options. One way our equipment replacement fund is paid $800,000 for their trouble, the other way the equipment replacement fund is paid $400,000.

Is that accurate? Kind of, sort of, and let me say it back to hopefully answer, I think, what you're getting at. To do the math at a full lump sum of $3.4 million over the next seven years, because you're obviously going to take it out the first year and pay it back in seven years with that eight-year plan, you're looking at about $565,000 worth of interest, and those annual payments are about $566,000 a year. What is interesting about the concept, though, is you have either the equipment replacement fund win and or lose based on where the current market goes. So, if we lock in 4 percent with an inter-fund loan, which is what we're supposed to do by the ORS, we're supposed to have a payment schedule, and our investments return four and a half, we're really not giving the same dollar amount back to equipment replacement.

Male Speaker Thank you.

Further discussion. OK, you have one counselor that is proposed to continue to utilize option three, which was presented today, continue with current plan and use the interloan fund for the remaining three years. Since there's no further discussion, I will try to gauge the weight of the council's Appetite to go with that direction so for those counselors that would like to continue with the current plan and use the interloan fund for the remaining 3 years please put your thumbs up.

That's the new proposal today correct submitted today okay.

So your thumbs up you want to go with the submitted proposal today split the baby in half okay so you got 1, 2, 3, 4 okay. And so people that do not want to go, proceed forward with the presented plan today. Put your thumbs up. Do not. Do not. So three. So you got four to three. One, two, three, four, five, six, seven, eight. So majority council wants to go forward with continuing the current plan and use the interloan plan for the remaining three years as presented today. Do you have direction? All right. Thank you.

Yep.

and at probably any point in time since you guys are a judicial body you could bring this up you can future and discuss it more and do it again so with that we will go into agenda review and I have a committee on public art motion do I have that motion oh i threw a bunch of stuff wait do you have another copy sorry okay so council will be presented a committee of public art motion or perspective motion the committee of public art motion recommending that the city council support using a portion of the budget and available funds for the new water treatment plant to pay for a mural or other decorative art on the water tank in the interest of supporting a positive outcome of public art for a healthy community for tourism promotion the amount to be determined through a review and other similar situated water tanks so this is a motion by the public art committee to have the city set aside some funds to put a mural on the water tank questions um uh kathleen no i just have a comment okay does anybody have a question any questions on the motion as presented Okay, discussion about the motion as presented. Kathleen.

I think this is premature and I would like to table this until the water treatment plant's finished and we see what kind of art or whatever would be needed for the building. I think this is just, I would vote no on this right now.

Any further discussion? Rick. I'm the liaison on COPA. and the reason this came forward there is a thing in state law when you're doing a state building that one percent of the proceeds need to be spent on art in some form but it's not applicable to cities or counties so the committee felt they want to do sort of a test the waters and see whether the council would be willing to look in the future of doing something

with art on the new water treatment plant thank you okay any further discussion all right you have a motion on the table joel what what was it going to cost uh that was to deter to be determined the amount to be determined through a review of other similar situated water tanks so the amount to be determined i'm just reiterating that

They're asking us to vote when we don't know what the cost is.

Okay, the motion recommending that the City Council support, support, City Council support using a portion of the budget and available funds for the water treatment plant to pay for a mural and other decorative art on the tank with the amount to be determined later. So I believe this is, yeah, this is a motion basically City Council setting aside money from the budget for the construction of the water treatment plant.

so it would seem to me like it's not ripe for a vote yet and that we should just uh see what it's going to cost and then bring it back to us and if it's reasonable then do it okay and i think we have a couple sentiments already about uh not actually going through with this and tabling it for a further discussion indra did you want to add to this yes i just wanted to say we appreciate copa and all that they do and i think it's a great idea and it would look great but i think after our previous discussion it is a little premature thank you

There's actually a water tank I think in Tennessee that's really far above the ground and it has a black silhouette of the king, Elvis Presley. And one day somebody went up there and punched a hole right in the crotch area there. It was all over the internet for a while. guys the climate so we have decided as counsel to that this was a good idea for discussion but you are not ready to make the motion and that would you would entertain further discussions in the future correct correct thank you okay next we have a discussion of the upcoming business meeting on Wednesday you all had your packets they're a beautiful salmon color beautiful It's almost too bright to look at something. So does anybody have any questions in regards to the Wednesday night meeting as you have had your packets for a couple days and have digested them and read this thoroughly and are fully educated on what's going to go on? Any questions?

Go ahead, Rob. So on item three on the appointments, motion appointing two members of the Small Business Task Force, it's my understanding that the Small Business Task Force is like more than half done with its work or whatever, so how much more time is on the Small Business Task Force? It just seems that if we're appointing two people, they would have missed at least half the proceedings. I'm not sure how they could vote on any end decision. So I'm just wondering how much more time or what percentage of the Small Business Task Force term has already been up? Maybe Indra knows off the top of your head.

I think it's open ended. It was six to 12 months. So there is a lot of time and I think it could be extended as well if we needed to. So the task force does feel like it's a good idea to put a couple more members on and would appreciate that going through.

any other questions in regards to Wednesday night's meeting you okay that portion is closed up any questions or concerns about the upcoming calendar Victoria yes I want to make sure that we are very quickly looking over the

Parker's Place Village there have been a few things that have come up and the public is exceedingly concerned about it and needs to hear from us much sooner rather than later and there are a lot of there's a lot of information out there and I It needs to be discussed up here. So I was looking on here, and I'm not quite sure where I see it. And I know that you guys were going to be looking at it during agenda review this last Thursday. So I guess my question would be, did you do that? And is it reflected here on the calendar?

Nope. We did not discuss that in agenda setting last week because I postponed agenda setting because I was still traveling due to forest fires.

Oh, OK.

So we've rescheduled for this week. So I do apologize that we did not be able to go through with that. So I would look to Stephanie to see if she has an anticipated timeline on a upcoming update.

Yeah, we'll know more by agenda setting. Maybe we'll be able to know more by Wednesday night's meeting to give you a brief update potentially. We're still working through coordination of talking about the contract and the grant agreement and how it relates to the parties involved. We should anticipate having some more discussions at the beginning of the week to where maybe we can provide some more information Wednesday or by the agenda.

So either this Wednesday night meeting will get more information or it will be discussed in Thursday and agenda setting. Yes. OK. Thank you.

OK. Any further discussion in regards questions in regards to upcoming calendar. Joel and then Kathleen Joel.

So we have the unimproved alley maintenance with Public Works. We're going to schedule that for August 31st. Is that correct? Well, that's the date. It was for November 16th. Yep.

Yes, it was requested. It was requested by staff to have it November that November date.

November 16th.

Yeah.

OK. And then the paper on

uh laterals ownership and maintenance we're going to have that by september 15th yeah it's nearly complete now i should have it to aaron for review probably the end of the week early next week okay good good yeah that's good thank you kathleen oh i see on here we're going to have the beacon hill park survey review on october 5th so we have a good idea of what everybody voted on as far as

Yeah, you'll be able to see the results of the survey and then have further discussion on what you want to do with that.

And are we getting the memo on the decorum discussion soon? The memo?

Yes, the invocation component. There will be a memo released in the not too distant future.

Anybody else?

Anybody else going on?

Okay. So I received a letter officially addressed to the mayor of Grants Pass, and this is from a law firm up in Salem. I don't even know how they're related to it, but it says, thank you very much for your letter and a copy of Resolution 26-7709, supporting modification or repeal of Senate Bill 48. to enhance public safety, best regards, blah, blah, blah, blah, blah. So we did get some response from your guys' resolution and distribution of that letter. So I just wanted to pass that on. And like I stated earlier, agenda setting was postponed this last Thursday to this coming Thursday due to some travel issues on my side. So I don't have anything else to add. Anybody else? Staff? okay thank you very much uh council workshop august 31st is now adjourned and you can all go home thank you welcome back oh yeah